extract BOI Board of Thailand edition Feb 2014

Thailand's Medical Industry

Thailand is well positioned to be the medical hub of Asia. The country offers state-of-the-art facilities and technologies, internationally certified medical services, excellent medical expertise, highly qualified medical professionals, and a wide range of high-standard hospitals. Thailand also has a significant number of internationally accredited medical facilities.

In order to develop Thailand into an "International Health Center for Excellence", the Ministry of Public Health, the national focal point for implementation of the Medical Hub Policy, is executing its second strategic five-year plan (2012-2016). The plan encompasses four major areas: medical services, integrative wellness centers, development of Thai herbs, and traditional and alternative Thai medicines.

Thailand is the world's largest medical tourism market, with the number of international patients continuing to rise. In 2012, Thailand welcomed more than 2.5 million international patients, a 14% increase from 2011. According to Thailand's Ministry of Public Health and the Kasikorn Research Center, Thailand's 2012 revenue from medical tourism was between US$ 4.0 billion and US$4.7 billion, up from US$3.2 billion in 2011.

Thailand also attracts thousands of international patients with its traditional and alternative medicines. Alternative medicine uses herbal medicines, biofeedback, and acupuncture in lieu of drugs. A broad range of practices are used including homeopathy, naturopathy, chiropractic, and acupuncture. The Thailand Ministry of Public Health has formally supported the sector in an effort to promote Thai traditional and alternative medicines in hospitals nationwide.

The initiatives that Thailand has undertaken to strengthen its position as the medical hub of Asia have created opportunities for continued growth in related fields, including the medical services, medical device, and pharmaceutical sectors. As a result, the country has become an excellent location for investment.

Thailand offers world-class medical facilities. Thai hospitals are among the first in Asia to be Joint Commission International (JCI) accredited. Over 1,000 public and 300 private hospitals across the country operate in compliance with international standards and employ internationally trained physicians. With warm hospitality, patients feel right at home. Many hospitals have specialized English speaking staff and several provide translators in a wide variety of foreign languages, including Arabic, Japanese and Chinese, to ensure that there are no communication barriers between doctor and patient. Additionally, Thailand provides excellent healthcare services at highly competitive prices.

International patients visit Thailand for a variety of treatments including general examinations, dentistry, cancer treatments, hip replacements, kidney transplants, cardiology testing, heart surgeries, laser eye surgeries, cosmetic surgeries, weight loss surgeries, and sex change operations. The price of surgery services in Thailand is far lower than the price of similar procedures in the USA or Europe. Thailand also narrowly edges out Singapore in surgery price comparisons, contributing to the country's domination of the global medical tourism market.

The Thai government's continued efforts to develop the country into an Asian medical hub have driven up demand for medical services and devices. Although a wide range of medical devices are manufactured domestically, Thailand still relies heavily on imported medical devices, especially sophisticated and higher-end devices from countries such as United States, Japan, and Singapore. This backdrop creates an opportunity for new investment in high-end medical device manufacturing in Thailand.

Actually, the market for medical devices has strongly grown. In 2012, the market for medical devices in Thailand was US$2 billion, a 24% increase from the previous year. The market is predicted to reach US$2.5 billion and US$3 billion in 2013 and 2014, respectively.

Major international medical device manufacturers or distributors in Thailand include: 3M, Bausch & Lomb, Baxter Healthcare, Boston Scientific, Carl Zeiss, Diethelm, GE Medical Systems, Guidant, Johnson & Johnson, Medtronic, Philips Electronics (Medical Systems), Roche Diagnostics, Siemens (Medical Solutions) Surgical Instruments and Tyco Healthcare.

Another key driver of the medical industry, the Thai pharmaceutical market, valued at US$4 billion in 2012, is the largest in Southeast Asia. By 2020, this value is expected to increase to US$9 billion.

As Thailand has developed into the medical hub of Asia, its pharmaceutical market has also experienced significant growth. Thailand's cost-effective and high-quality manufacturing base has been a real magnet in attracting foreign pharmaceutical companies. In recent years, the increasing numbers of medical tourists, an aging population, and a higher level of health awareness amongst Thais have boosted the country's pharmaceutical image. Thailand also currently produces 25 active pharmaceutical ingredients, including sodium chloride, camphor, and menthol. Most active ingredients are imported from manufacturers overseas, leaving sizable room for new pharmaceutical investors.



Indeed, Thai imports of pharmaceuticals have grown steadily while exports have only increased slightly. From January to August 2013, imports were valued at approximately US $1.3 billion while exports were valued at US $301 million.

Thailand imports its pharmaceuticals from a variety of sources. From January to August 2013, the US was the largest importer of pharmaceuticals to Thailand and accounted for 13% of total imports. Switzerland, Germany, and France were the next largest importers at 10%, 10%, and 9%, respectively. Half of Thailand's pharmaceutical exports were destined for the ASEAN region including Myanmar (16%), Vietnam (15%), and Cambodia (8%).

Lastly, medical food refers to cuisine that is formulated to be consumed or administered under the supervision of a physician. It is part of a specific dietary regime intended to treat a disease or condition, and the food has distinctive nutritional requirements.

Thailand's medical food market is experiencing strong growth and has benefited from the country's medical services sector. Many leading medical food manufacturers invest in Thailand because of the country's agricultural raw materials, skilled, affordable labor, advanced technology, and high quality-control standards. Additionally, the Government offers attractive incentives to investors in this sector. As a result, Thailand is an excellent strategic location for the production of medical food.

Indeed, the aforementioned subsectors were showcased thoroughly at the 2012 Thailand Medical Hub Expo. The event depicted the reaffirmation of Thailand and of the Ministry of Public Health to demonstrate the readiness and potential of the country to assert itself as the world's premier medical hub that is also affordable to both Thais and foreigners. According to Prime Minister Yingluck Shinawatra, the Government already has set into motion a policy that will be implemented from 2012 to 2016 for the purpose of elevating Thailand as the number one medical industry center. Also, Public Health Minister Wittaya Buranasiri mentioned that this policy will bring in 800 billion baht in earnings in the next five years. Since the beginning of 2012, about 2.5 million foreign tourists have visited Thailand for medical services, bringing in about 121.6 billion baht.

It must be pointed out that the Board of Investment of Thailand (BOI) grants attractive tax incentives to investors and businesses in the medical sector. Apart from attractive tax inducements, the BOI also provides non-tax incentives such as land ownership rights for foreign enterprises, permission to bring in foreign experts and technicians, and work permit and visa facilitation for expatriate employees.

The BOI offers attractive investment incentives to a wide range of activities related to the medical sector, such as the manufacture of medical food and the manufacture of medical equipment. Major incentives include corporate income tax exemption and duty concessions on machinery and raw materials. In addition, a number of non-tax incentives are available, such as the right to own land and facilitations with visas and work permits for expatriates.

Also promoted are retirement homes and care centers, as well as dedicated health centers which are facilities that can provide medical or psychotherapeutic treatment through the use of advanced technological devices and facilities.

According to National Statistical Office, it is estimated that Thailand's population will increase to 70 million by 2019. The change in population structure will increase demand for medical devices and healthcare products. Along with government policies to promote the growth of the sector, and for the country to become the premier medical hub of Asia by 2020, the Thai medical industry is definitely bright with high growth potential.